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7-6 HOW DO WE DETERMINE THE ANNUAL PERCENTAGE RATE (APR)?

7-6 HOW DO WE DETERMINE THE ANNUAL PERCENTAGE RATE (APR)?. If you know the number of monthly payments and the finance charge per $100 of the amount financed, you can use a table to find the annual percentage rate of the loan.

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7-6 HOW DO WE DETERMINE THE ANNUAL PERCENTAGE RATE (APR)?

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  1. 7-6 HOW DO WE DETERMINE THE ANNUAL PERCENTAGE RATE (APR)? • If you know the number of monthly payments and the finance charge per $100 of the amount financed, you can use a table to find the annual percentage rate of the loan. • You can use the APR of Loans to compare the relative cost of borrowing money. Finance Charge per $100= $100 x Finance Charge/Amount Financed

  2. LET’s PRACTICE Paul Norris obtained an installment loan of $1500 to pay for his radio equipment. The finance charge is $146.25. He agreed to repay the loan in 18 monthly payments. What is the annual percentage rate? Find the finance charge per $100.($100 x (Finance Charge/Amount Financed) $100 x ($146.25/$1500.00) = $9.75 finance charge per $100 Find the APR.(Refer to the table above) In the row for 18 payments, find the number closest to $9.75. It is $9.77. Read the APR at the top of the column. APR is 12.00%.

  3. 7-7 Refund of Finance Charge • 1. If you repay an installment loan that is not a simple interest installment loan before the final due date, you may be entitled to a refund of part of the finance charge.2. The refund is usually stated as a percent of the finance charge. • Refund = Finance Charge X Percent Refund

  4. LET’s PRACTICE • Viola Stambaugh had a 12-month installment loan. The total finance charge on the loan was $113.80. How much was Viola’s refund if she paid off the loan with the 7th payment? • Find the percent refund from table. 19.23%Find the Refund. (Finance Charge X Percent Refund)$113.80 X 19.23% = $21.88 refund

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